BILL ANALYSIS Ó
AB 2200
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Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 2200
(Thurmond) - As Amended March 17, 2016
SUBJECT: School Employee Housing Assistance Grant Program
SUMMARY: Requires California Housing Finance Agency (CalHFA) to
administer a grant program to provide development financing
assistance to qualified school districts for the creation of
affordable rental housing for school districts employees,
including teachers. Specifically, this bill:
1)Defines a "qualified school district" to mean a school
district that satisfies the following:
a) Has acquired and designated surplus land from a school
district, special district, or city;
b) Has a high average cost for the recruitment of teachers;
c) Has a low retention rate; and
d) Has 60% of its students participating in the National
School Lunch Program.
AB 2200
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1)Requires CalHFA to do all of the following to administer the
grant program:
a) Be responsible for overseeing the grant program;
b) Award grants to qualified school districts;
c) Determine the predevelopment grant amount and the
development grant amount for each qualified school
district;
d) Publish deadlines and written procedures for the
program;
e) Provide technical assistance to a qualified school
district that is not eligible to receive a development
grant in applying for additional public funds.
1)Requires a qualified school district seeking a grant to
provide CalHFA with the following:
a) An eligible basis certificate required as part of an
application for the Low Income Housing Tax Credits (LIHTC)
program.
b) An itemized list of funds from state and federal
programs and private funds used to cover the project costs.
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1)Creates the School Employee Housing Assistance Grant Fund (the
Fund) in the State Treasury.
2)Continuously appropriates $100,000,000 from the General Fund
to the Fund.
3)Allows CalHFA to use 5% of the moneys appropriated for grants
for predevelopment loans.
4)Requires CalHFA to determine the predevelopment costs of the
project excluding any costs related to the acquisition of the
land in order to determine the grant amount the qualified
school district can be awarded.
5)Requires a qualified school district to show a measurable
degree of incapacity to fund the predevelopment project costs
to qualify for a grant.
6)Requires CalHFA to determine the development grant amount a
qualified school district is eligible for by taking the
difference between the eligible basis as specified in the
eligible basis certification subtracting any costs for land
acquisition and any predevelopment project costs and the total
amount of any public and private funds received for the
project.
7)Requires the qualified school district to show that the
project is not eligible for additional public funds as
described in its eligible basis certification and that the
project is subject to a project labor agreement and prevailing
wage requirements in order to receive a development grant.
AB 2200
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EXISTING LAW:
1)Defines eligible basis certification as a certification from a
certified public accountant or tax attorney that project costs
included in applicant's calculation of eligible basis are
allowed by IRC Section 42, as amended, and are presented in
accordance with standard accounting procedures. If the project
uses HOME Investment Partnership Program funds, then the tax
professional must further certify as to the treatment of HOME
Program funds for purposes of eligible basis calculations.
(Tax Credit Allocation Committee regulations for the Low
Income Housing Tax Credit Program)
FISCAL EFFECT: Total effect unknown. Includes an appropriation
from the General Fund of $100,000,000.
COMMENTS:
Background :
California has seen a drastic decline in funding to support the
construction of affordable housing for very low-, low- and
moderate-income families. Historically, the state has invested
in low- and moderate-income housing primarily by providing
funding for construction. Because of the high cost of land and
construction and the subsidy needed to keep housing affordable
to residents, affordable housing is expensive to build.
Developers typically use multiple sources of financing,
including voter-approved housing bonds, state and federal
low-income housing tax credits, private bank financing, and
local matching dollars.
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Voter-approved bonds have been an important source of funding to
support the construction of affordable housing. Proposition 46
of 2002 and Proposition 1C of 2006 together provided $4.95
billion for affordable housing. These funds financed the
construction, rehabilitation, and preservation of 57,220
affordable apartments, including 2,500 supportive homes for
people experiencing homelessness, and over 11,600 shelter
spaces. In addition, these funds have helped 57,290 families
become or remain homeowners. Nearly all of these funds have been
awarded. In addition, prior to their dissolutions redevelopment
agencies generated as much as $1.7 billion a year in local
funding to support affordable housing.
CalHFA, the state's affordable housing bank, provides down
payment assistance to qualified low- and moderate-income buyers
through a loan secured on the property that is repaid when a
home sells. In addition, CalHFA provides loans to multifamily
housing developers to construct housing affordable housing.
CalHFA does not receive funding from the General Fund and pays
for its programs by issuing bonds which are then repaid from
loan proceeds. The Department of Housing and Community
Development (HCD) operates a variety of programs that support
the acquisition, rehabilitation and construction of affordable
housing to very low-, low- and moderate-income households. The
Multi-Family Housing Program provides gap financing to
affordable housing developers. Developments financed using MHP
or CalHFA's multi-family loans agree to provide the housing for
a term of 55 years.
This bill would require CalHFA to create and administer a grant
program to provide both predevelopment grants and development
grants to qualified school districts for the creation of
affordable rental housing for school employees, including
teachers. Only school districts with a high average cost for
recruiting teachers and a low retention rate would be eligible
for the grant.
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Purpose of this bill: According to the author, "There is no
existing program that allows financially-strained school
districts to receive funding for the development of school
employee housing. Some school districts in California have begun
to increase teacher retention by providing housing to teachers.
School districts in Los Angeles and Santa Clara, with San
Francisco considering such a plan, have teachers in
district-sponsored housing. However, for financially-strapped
districts in high-cost areas, such a proven solution is not an
option for attracting new teachers into the district. And while
the Extra Credit Teacher Home Purchase Program does incentivize
homeownership for school employees, for many new teachers
beginning their career, rental housing is the first step prior
to homeownership-a step that those in high-cost areas cannot
take. AB 2200 seeks to close the achievement gap by allowing
school employees, including teachers, to remain in the cities
where they work. Specifically, the bill creates a $100 million
grant program which will provide financial assistance to school
districts that cannot independently fund housing for school
employees. Gap financing will be given to school districts
which: (1) have acquired land for development (2) can show high
recruitment costs and low retention rates (3) have 60% of
students participating in the Free and Reduced Lunch Program.
The grant allocates 5% of its funds towards predevelopment costs
that school districts that cannot independently fund. "
Arguments in suppor t: According to the sponsor of the bill, the
City of Oakland, "statistics show that the price of housing in
California has risen exponentially in the last decade, while
educator's wages have remained largely stagnant. This is
especially true in the Bay Area where starting teacher salaries
remain in the low $50,000 range and median home process are over
$1,000,000."
Policy considerations:
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1) CalHFA would be required to determine the amount of the
predevelopment grant by subtracting the cost of land from
the predevelopment cost of the project. The bill does not
define what activities a predevelopment grant can be used
for so it is unclear how CalHFA would determine the
predevelopment cost for the purpose of making this
calculation.
2) This bill would require CalHFA to make loans to school
districts. Historically, both CalHFA and HCD have made
loans to developers with the expertise to build affordable
housing. It's unlikely that many school districts have the
expertise to assemble the financing needed for a affordable
housing development or construct the housing. The
committee may wish to consider whether grants for
development should be made to school districts or to
developers who have partnered with school districts.
3) This bill requires grants be made for "affordable rental
housing" for school district employees including teachers,
however it does not define the income levels that would be
eligible for the housing. This bill also does not require
that the affordable housing units be restricted by
affordability covenants to ensure that the housing remains
affordable.
4) This bill requires CalHFA to assist a school district
that is not eligible to receive a development grant to
apply for other a public funds. It is unclear what other
public funds would be used for; in addition, CalHFA likely
does not have the expertise to assist a school district in
applying for public funds.
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5) This bill requires CalHFA to make loans to school
districts that have a "high average cost for the
recruitment of teachers and low retention rate" however
these terms are not defined in the bill. Without a standard
or definition of these criteria it's unclear how CalHFA
would determine which school districts qualify for the
grants.
Committee amendments:
1) Cap the amount of the grant to $10 million per project.
2) Require a qualified school to provide a certification
from the Department of Education that they are "qualified
school district";
3) Define affordable rental housing to serve low- and
moderate-income households up to 120% of AMI; and
4) Restrict the affordability of the housing for 55 years.
Double referred : If AB 2200 passes this committee, the bill
will be referred to the Committee on Education.
REGISTERED SUPPORT / OPPOSITION:
AB 2200
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Support
City of Oakland (sponsor)
AFL CIO Housing Investment Trust
California Catholic Conference
City of Walnut Creek
Oakland Unified School District
Opposition
None on File
Analysis Prepared by:Lisa Engel / H. & C.D. / (916) 319-2085,
Lisa Engel / H. & C.D. / (961) 319-2085
AB 2200
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